What is the cap on the cumulative exposure of Banks and NBFCs in Alternative Investment Funds (AIFs) , as a percentage of the AIF scheme corpus, as stated by RBI?  

The RBI has capped cumulative exposure of regulated entities (REs) like banks and NBFCs in Alternative Investment Funds (AIFs) at 20% (up from 15%), with a 10% cap per RE per scheme, effective January 1, 2026.   Equity instruments in downstream AIF investments are now excluded from provisioning norms, addressing industry concerns and aligning with SEBI regulations. If an RE invests over 5% in an AIF with downstream debt exposure to its borrower (excluding equity), it must make a 100% provision for that exposure.   Contributions in the form of subordinated units will be fully deducted from Tier-1 and Tier-2 capital. The move follows past concerns over evergreening loans via AIFs and aims to tighten governance while still supporting equity AIFs.